The Flexibility of the Price Level Tends to Dampen the Multiplier

question 16

True/False

The flexibility of the price level tends to dampen the multiplier effect of fiscal policy.

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Definitions:

Fixation

Arrested development at a psychosexual stage occurring because of excessive gratification or frustration at that stage.

Divergence

The act of moving away in different direction from a common point; in creativity and thinking, it refers to the generation of multiple solutions to a given problem.

Convergence

The process by which eyes adjust their angle so that the visual axes meet at the point of focus, or in a broader sense, the tendency for ideas and phenomena to evolve towards a common point.

Pupil

The opening in the center of the iris of the eye that regulates the amount of light that enters the eye to reach the retina.